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Renault to spend billions to buoy up Nissan

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TOKYO -- French automaker Renault SA will invest $5.4 billion in Nissan Motor Co. to buoy the debt-laden Japanese car manufacturer, the two companies agreed Saturday, creating the world's fourth-largest auto partnership.

The deal, which makes Renault the biggest shareholder in Nissan, Japan's second-largest carmaker, is the latest example of increasing involvement by foreign companies in Japan's once virtually closed auto sector.Together, the two will have an output of 4.8 million vehicles and the ability to develop "strong synergies" worth $3.3 billion for the 2000-02 period, the companies said.

"As automakers, both companies have a strong wish to be giant global players," Nissan President Yoshikazu Hanawa told reporters. "That's why we reached this agreement."

Hanawa and Renault Chairman Louis Schweitzer inked the deal after it was approved by both companies' boards. Schweitzer said the deal would "produce both growth and cost reduction."

Renault will take a 36.8 percent stake in Nissan Motor and a 22.5 percent stake in Nissan Diesel Motor Co., a truckmaker subsidiary.

Nissan ranks No. 7 in world production of cars and trucks, and Renault is 11th, according to industry analysts at Ward's Automotive International.

Renault first made a formal offer to buy a stake in Nissan on March 16, after talks between Nissan and Germany's DaimlerChrysler broke down. At the time, Nissan was seeking a foreign partner to help it write off an estimated $18 billion in debt and return to profitability.

The Japanese government praised the deal.

Kaoru Yosano, Japan's minister of international trade and industry, said in a statement that the deal "corresponds with an industrial revival program which Japan is seeking to implement."

Once a symbol of Japan's industrial might, Nissan has suffered losses during five of the last six years. The company's own forecast also shows it losing another quarter of a billion dollars this year.

Foreign companies have become more involved in the Japanese car industry as it struggles with slumping sales caused by the Asian economic crisis and Japan's worst recession in 50 years.

In 1996, Ford Motor Co. gained a controlling share in Japan's Mazda Motor Corp.

In other big multinational tie-ups, Ford announced in January that it was buying the passenger car operations of Volvo AB, while Daimler-Benz AG bought Chrysler Corp. last year.

Currently, General Motors Corp. is negotiating with Saab Automobile AB to buy the half of Saab that GM doesn't already own, according to widespread news reports.